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TMI Blog2022 (9) TMI 1612X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the information which had been received by it, has in Para 2 of the impugned order observed thus:- "2. The Commission considered the Information in its ordinary meeting held today and noted that the subject matter of the allegations made in the instant Information is substantially the same, which is currently under examination before the Director General ("DG‟) in the ongoing investigation in Suo Motu Case No. 01 of 2021. Accordingly, in terms of proviso to Section 26(1) of the Act, the Commission decided to club the present matter with Suo Motu Case No. 01 of 2021. No separate order or further direction is required to be passed on the instant Information and the same shall abide by the decision of the Commission in Suo Motu Case No. 01 of 2021. It is clarified that the scope of the Order dated 24.03.2021 passed under Section 26(1) of the Act, in Suo Motu Case No. 01 of 2021, remains unaltered by virtue of the clubbing of the present matter with Suo Motu Case No. 01 of 2021." 3. Consequent to the aforesaid direction of the Commission, the Director General had issued a notice on 26 October 2021, calling upon the petitioner here to submit requisite information. The Suo Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant will have to first make out a prima facie case before the learned Single Judge that there is no allegation against it in the Order of the CCI. The case of the Applicant would involve independent application of mind by the learned Single Judge. The instant appeals are primarily on the issue as to whether the CCI ought to wait till final adjudication of the issues which are pending before the Apex Court. The impleadment Application cannot be entertained in the instant appeals which have been filed by Facebook Inc. and WhatsApp. This Court, therefore, does not deem it fit to scuttle the investigation at a nascent stage and defers to the wisdom of the DG and the CCI, and rejects the Impleadment Application. However, the Applicant is granted the liberty to take all such steps as required by it, in accordance with law, to impugn the CCI order." 5. It is in the aforesaid backdrop that the instant writ petition has come to be preferred. Before proceeding further to record the submissions which were addressed on this petition, it would be pertinent to note that the petitioner asserts to be a private limited company whose current role is explained to be limited to providing sales and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s" for a variety of purposes including marketing and advertising. The Commission noted that users, as owners of their personal data, were entitled to be informed about the extent, scope and sharing of such data by WhatsApp "with other Facebook companies". It further recorded that it was unclear whether the historical data of users would also be shared with "Facebook companies". It went on to observe that prima facie the conduct of WhatsApp in sharing the personalized data of its users with "other Facebook companies" appeared to be lacking in transparency, unfair to users and not based on a voluntary and specific user consent. It was in the aforesaid backdrop that the Commission proceeded to frame directions for the Director General to commence an investigation. 9. Mr. Tripathi, learned Senior Counsel appearing in support of the writ petition, principally contended that a reading of Section 26(1) of the Act would establish that the framing of a direction by the Commission to cause an investigation to be made must be premised on it coming to the conclusion that a prima facie case exists and which warrants an investigation. According to Mr. Tripathi, a reading of the impugned order w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for investigation; or where it finds that there exists no prima facie case justifying passing of such a direction to the Director General, it can close the matter and/or pass such orders as it may deem fit and proper. In other words, the order passed by the Commission under Section 26(2) is a final order as it puts an end to the proceedings initiated upon receiving the information in one of the specified modes. This order has been specifically made appealable under Section 53-A of the Act. xxx xxx xxx 97. The above reasoning and the principles enunciated, which are consistent with the settled canons of law, we would adopt even in this case. In the backdrop of these determinants, we may refer to the provisions of the Act. Section 26, under its different sub-sections, requires the Commission to issue various directions, take decisions and pass orders, some of which are even appealable before the Tribunal. Even if it is a direction under any of the provisions and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage of forming a prima facie view, as required under Section 26(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed reasons in support of its ultimate conclusion of an investigation being merited in its order of 24 March 2021. Referring the Court to the said order, learned counsel highlighted the fact that the principal issue of sharing of personalised user information by WhatsApp was being considered in relation to Facebook and its subsidiaries as well as other Facebook companies. Learned counsel also argued that the petitioner has only been called upon to join the investigation and that no rights have been adjudicated upon or decided. It was urged that, in the absence of any prejudice having been caused to the petitioner, the challenge as raised in the impugned writ petition, is liable to be rejected. 14. Learned counsel also placed reliance upon the judgment rendered by a Division Bench of the Court in Cadila Healthcare Limited and Anr. v. Competition Commission of India and Ors. 2018 SCC OnLine Del 11229 It becomes pertinent to note that the aforesaid decision dealt with the validity of a direction issued by the Director General impleading Cadila Healthcare in an ongoing investigation even though it had not been joined as a party by the Commission in the directions which were issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd should be reasoned (per SAIL). Upto this stage, with that enunciation of law, no doubt arguably Cadila could have said that absent a specific order as regards its role, by CCI, the DG could not have inquired into its conduct. However, with Excel Crop Care specifically dealing with the question of alleged "subject matter" expansion (in the absence of any specific order under Section 26(1)) and the Supreme Court clarifying that the subject matter included not only the one alleged, but other allied and unenumerated ones, involving others (i.e. third parties), the issue is no longer untouched; Cadila, in the opinion of this court, is precluded from stating that a specific order authorizing transactions by it, was a necessary condition for DG's inquiry into its conduct. This court is further reinforced in its conclusion in this regard by the express terms of the statute : Section 26(1) talks of action by CCI directing the DG to inquire into "the matter". At this stage, there is no individual; the scope of inquiry is the tendency of market behaviour, of the kind frowned upon in Sections 3 and 4. The stage at which it CCI can call upon parties to react is when it receives a report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exercise of jurisdiction by the DG into a potential abuse of dominant position of a commercial entity). Therefore, this court finds no merit in the argument that the procedure adopted by the DG in going ahead with the inquiry and investigating into the market behaviour of Cadila in anyway affects it so prejudicially as to tarnish its reputation. The CCI has not as yet examined the investigation report in the light of Cadila‟s contentions; all rights available to it, to argue on the merits are open." 15. Before proceeding to deal with the submissions which were addressed by learned counsels appearing for respective parties, the Court deems it apposite to extract the following passages from the decision of the Supreme Court in Steel Authority of India where the scope and ambit of Section 26(1) of the Act was lucidly explained in the following terms:- "38. In contradistinction, the direction under Section 26(1) after formation of a prima facie opinion is a direction simpliciter to cause an investigation into the matter. Issuance of such a direction, at the face of it, is an administrative direction to one of its own wings departmentally and is without entering upon any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing is not contemplated under the provisions of Section 26(1) of the Act. xxx xxx xxx 93. We may also usefully note that the functions performed by the Commission under Section 26(1) of the Act are in the nature of preparatory measures in contrast to the decision-making process. That is the precise reason that the legislature has used the word "direction" to be issued to the Director General for investigation in that provision and not that the Commission shall take a decision or pass an order directing inquiry into the allegations made in the reference to the Commission." 16. The Division Bench in the Letters Patent Appeals preferred by the WhatsApp LLC and Facebook, Inc. while elucidating the scope of Section 26(1) had also pertinently observed that the said provision does not contemplate the Commission discharging an adjudicatory function. The Court had held that the function as discharged by the Commission under Section 26(1) is essentially administrative in character and in the nature of a preparatory measure which merely requires the Director General to commence an investigation. Proceeding further to explain the scope of a prima facie case, the Division Bench while f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncipal entities noticed above but also other companies which may fall under the umbrella of control and influence of the latter. That decision presently stands confirmed by the Division Bench of the Court. If that be the scope of the matter which is envisaged to be investigated by the Director General, the Court fails to appreciate how the petitioner could possibly contend that its clubbing in the Suo Moto Case was unjustified. 19. The Court also deems it apposite to observe that Cadila has lucidly explained the scope of the expression "subject matter" as occurring in Section 26(1) as not being restricted merely to the allegations levelled but other "allied and unenumerated" aspects and even to include third parties. It would be pertinent to recall that Cadila was a case where a party was joined by the Director General during the investigation even though no directions had been framed against it by the Commission in its order made under Section 26(1). While affirming that action, the Court had specifically rejected the contention that the joining of Cadila in the proceedings was liable to be preceded by the Commission applying its mind specifically to the role discharged by it. He ..... 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